Trust in the Age of Transparency

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The comedian Barry Sobel used to do a funny bit about his dad’s favorite sayings. One of them was “That’s how they get you!”—his reflexive warning to anyone falling for some business’s blandishments. Free overnight stay if you’ll listen to a time-share pitch? Hang on to your wallet. Loyalty rewards? What’s the catch? Bread with a meal, at no extra charge? That’s how they get you.

If you’re running a business, this is what you contend with: the rampant assumption that your main goal in life is to part fools from their money.

The spate of recent books advising companies on how to gain people’s trust would indicate that the suspicion has only gotten worse. Is that business’s fault? Most assume yes. Listen, for example, to Don Peppers and Martha Rogers. In Extreme Trust: Honesty as a Competitive Advantage, they write: “Untrustable business models thrive in our economic system today largely because being untrustable can be highly profitable—in the short term anyway—and many businesses are managed almost entirely for short-term results.” Rohit Bhargava, in Likeonomics, tells us: “The first and most basic reason for distrust is because there are so many companies and people who choose to lie to us either by making misleading claims or simply by hiding the truth.” And these are from the authors who want to help business (as opposed to, say, David Cay Johnston, whose forthcoming book is titled The Fine Print: How Big Companies Use “Plain English” and Other Tricks to Rob You Blind).

The books offer a variety of solutions. Peppers and Rogers say that to overcome customers’ suspicions that you’re a scam artist, you must go to extremes to show you’re on their side. Beyond trustworthiness, you must achieve “trustability.” It’s a more proactive stance that has you not just keeping up your end of a bargain but ensuring that the bargain is the best one from the customers’ point of view—and even saving customers from their own mistakes. Bhargava thinks the key to being more trusted is, as in personal relationships, to be better liked. Still another book, by Ed Keller and Brad Fay, suggests it’s the facelessness of the modern multinational that makes people wary. The Face-to-Face Book is wordplay to remind us that, as much as we love social media, we still trust the friends we see most in the “real world.” So give up on earning trust as a company; instead, get real people having real conversations to act as your proxies.

Against this chorus of business blamers and fixers, the Yale economist Robert J. Shiller strikes a very different note. In Finance and the Good Society, he agrees that trust in business has been shaken (and cites, as they all do, the Edelman Trust Barometer as evidence), but Shiller doesn’t think it’s because business has in fact become more devious. Rather, he argues that a “great illusion” has taken hold in the public, whereby corporations and wealthy individuals are thought to “have an interest in ‘conquest,’ just as states were once thought to have.” Shiller points out how that defies logic. Only companies that serve their customers well remain in business. True enough: There is no management best seller called Bilk to Last.

“As standards for trustability continue to rise, the companies, brands, and organizations shown to lack trustability will be punished more and more severely.”

Shiller is probably right that business is not getting less trustworthy. It is not even clear that business is less trusted. (Despite what people tell opinion surveys, their buying behavior shows them placing more trust in businesses every year.) The real problem might be that, as time goes on, consumers are increasingly being placed in situations where they are forced to trust—and they resent that. One driver of this is the large-scale shift from a product- to a service-based economy. If what you’re buying is a chair or a wristwatch, quality checking and price finding are straightforward. No particular leap of faith is required. But if you’re hiring a pest-control company to save your house from termites, or a security service to fend off identity thieves, or a college to educate your child, you have no option but to trust. For much of what they buy today, consumers can’t even tell whether the outcomes are good, let alone whether the prices are right.

This is why transparency is so intertwined with trust. It’s interesting: Nearly everyone who writes about the latter makes a point of talking about the former, but the logic is not always clear. These books tend to equate transparency with “sunshine” and to treat the threat of exposure as something that nefarious companies are subjected to by whistle-blowers and watchdogs. When Peppers and Rogers bring up “the simple fact of transparency,” they define it this way: “From WikiLeaks and the Arab Spring to a cable TV repairman asleep on your couch or an airline’s luggage handlers mistreating bags, people will find things out.” The greater the transparency, they are saying, the harder it is for companies to be trusted.

The truth is that transparency is something that a company mostly controls and that mostly reassures its customers. By giving people a window into its workings, a company can show it has a sound process that it’s adhering to. It can avoid asking customers to have faith in a black box. The greater the transparency, in other words, the greater the trust.

It seems obvious, then: If you’re in business, especially if it’s a service business, take your customers to school on your processes. Teach them how you get the job done right and how you measure your performance, and let them see it happening.

Here’s the problem, though: When a company makes its operations transparent, it reveals them not only to its customers but also to its competitors. And since very few companies have cornered the market for raw materials or talent, making processes transparent means making the business easy to copy. That is why so many businesses stop short of revealing everything customers might like to know. And it’s why ideas like trustability, likeonomics, and face-to-face are needed to keep potential buyers from bolting.

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